Ezion veers towards 24.4% earnings rise

It's a thriving service rig segment.

According to a release, Ezion Holdings (Ezion) reported a 21.1% YoY rise in revenue to S$38.6m and a 24.4% increase in net profit to S$16.1m in 3Q12, such that 9M12 net profit accounted for 78% of our full year estimates.

The higher revenue was mainly due to chartering contribution from the additional deployment of a liftboat and a service rig, as well as higher contribution from offshore logistic support vessels segment with the commencement of the QCLNG project.

Operating margin at 38.3% in 3Q12 was within expectations, and higher than 37.0% in 3Q11.

Ezion also announced that it has entered into a JV with Kim Seng Holdings Pte Ltd (management of both companies have worked together before), and the JV has
secured contracts to provide two service rigs over a seven-year period.

The contracts are worth up to US$298m, and the customer is a national oil major in Central America. The rigs will be deployed in the Bay of Campeche and should start work in 1Q13.

Meanwhile, Ezion has also entered into a subscription agreement with Mr. Tan Boy Tee, formerly the founder and chairman of Labroy Marine. Mr. Tan will subscribe for 10m new shares at an issue price of S$1.2635/share (5% discount to VWAP on 5 Nov).

The CEO of Ezion, Mr. Chew, will also sell 10m shares to Mr. Tan at S$1.1305/share (15% discount).